Brics for progress

DIE HARD III
Herman Tiu Laurel
4/9/2012



The religious holidays are over and we’re back to the realities of the Filipino’s deteriorating everyday life. Very soon — that is next month — electricity bills reflecting yet another hike in the already highest power rate in Asia will confront each and every power consumer anew. Meanwhile, as the Mindanao power crisis rages on despite the flurry of PR pronouncements about official action on the matter, government still declares that Mindanaoans must either pay up or shut up in the darkness. One electric cooperative not standing down on the blackmail was recently mentioned in an e-mail by our fellow power consumer protectionist crusader, Jojo Borja, a major shareholder in Iligan Light and Power Inc. (ILPI).

Borja relays that “According to Barangay Captain Mateo Cortez, who is also Vice President of the Northern Mindanao Cooperative (Normic)… (at) a public hearing that was attended by Napocor (National Power Corp.) and NGCP (National Grid Corp. of the Philippines)… (but which) Psalm (Power Sector Assets and Liabilities Management Corp.) did not attend… members of the 33 Rural Cooperatives of Mindanao… instead opted for darkness as they refused to be blackmailed by Therma Marine Inc. (TMI) into signing very expensive long-term Power Sales Agreements (PSA).”

However, “with the recent ‘orders’ of (Energy Secretary) Almendras that they must buy (power from TMI)… they (have agreed) but only for one year to give Psalm enough time to repair the four power barges (of Napocor),” adding that “If Aboitiz will insist on a five-year take-or-pay contract… the cooperatives would rather choose the rolling brownouts.”

“In the case of Iligan City,” Borja says, “the ERC (Energy Regulatory Commission) already approved the PSA between Mapalad Energy Generation Corp. and ILPI. In spite of (his appeals) to ERC that the consumers of ILPI own a 104-MW (power plant) and that ILPI should not buy 2 units of 7.5-MW (megawatt) diesel, inefficient, obsolete power generation plants at P400 million, ERC railroaded the approval of an additional generation cost of P2.23 per kilowatt-hour (kWh) for the next 20 years — a rate that will increase after the first year for cost overruns (similar to what TMI did) and every three years thereafter as the value of the obsolete power plants will be reappraised as… allowed by the Epira (Electric Power Industry Reform Act).”

The first part of the e-mail is self-explanatory; but what is striking is Normic preferring the “rolling brownouts” over paying 50 percent additional to TMI which will provide the electricity from two power barges the Aboitiz Group “bought” from Napocor-Psalm — the two power barges reappraised from $30 million to $80 million to hike the rate base for their electricity supply, to allow the selling of power at P11/kWh compared to the normal P2.60/kWh in Mindanao.

The latter part highlights Epira’s distorted and corrupt consequences — in this case Iligan City, which acquired the 104-MW BOT (build-operate-transfer) power plant from the Alcantaras’ IPP (independent power producer) that was transferred back to Napocor due to non-payment of real estate taxes. As the crisis wore on, Iligan wanted to operate the plant. But for some unknown reason, ERC refused to give it provisional authority and instead approved new capacity at a higher additional cost imposed for the next 20 years.

It must be recalled that the 2001 Epira passage was an imposition of the (International Monetary Fund) IMF and its subalterns, the World Bank (WB) and the Asian Development Bank (ADB), in return for approval of stand-by and emergency loans of around $1.2 billion. Today, we find ourselves entrapped in a vicious cycle of power distortion and corruption created by Epira’s privatization and deregulation of power.

For this reason, the recent IMF pronouncements on “reforms” in the Philippines in this second decade of the 21st Century merely smack of rank hypocrisy and deception.

Last March 20, the WB through its country economist for the Philippines issued statements urging the Philippines to “speed up reforms,” saying “there should be measures to lower power rates.” Well, they certainly would never say that these measures are now improbable because of the convoluted rules made into law and instituted by the Epira that make government itself helpless in the face of an escalating crisis — that is, unless the Epira is repealed.

Let us be clear: An amendment to the Epira will just be a delusion since it is privatization itself that is at the crux of the unjust law.

So you may ask: Why the title for this column? The answer will become clear once we zero in on this welcome news: “Brics Bank to Rival World Bank and IMF and Challenge Dollar Dominance.”

Brics (Brazil, Russia, India, China, and South Africa), in its recent meeting in India, agreed to establish a “Brics Bank” that would fund development projects and infrastructure in developing nations, in order to reduce dependence on the dollar by conducting trade between the five nations in their own currencies, thereby positioning these as internationally-traded currencies.

With the Brics bank, the Philippines in the future would no longer have to be dependent on the exploitative conditionalities and policies of the IMF-WB-ADB three-headed hydra.

Finally, the multilateral financial institutions of the West will have competition and Third World countries can have choices in sourcing financial support for development needs.

If only Brics were around in 2001, the Philippines may not have been entrapped in the Epira nightmare.

Naturally, the Western press has not been happy with this development. Jeremy Warner of London’s The Telegraph (in “Why a Brics-built bank to rival IMF is doomed to fail”) writes: “Outside endemic corruption, uncertain or wholly absent rule of law, and relatively low per capita income and life expectancy, there wouldn’t appear to be much that unites this disparate collection of nations…” Well, news flash: Such statements reflect more the true state of Wall Street, Obama, and the Eurozone now trapped in the death throes of their financial crisis than anything else.

(Tune in to 1098AM, dwAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on “Fuel price crisis: Solutions” with consumer advocate Dr. Amanda Cruz and FDC; visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)